Interview with Bert Kaufman, Head of Policy and Regulation @ Zoox (Self Driving Cars)

Today, I’d like to introduce you to my friend Bert Kaufman, Head of Corporate and Regulatory Affairs at Zoox, one of the hottest self-driving car start-ups in the Valley.  I’ve previously written about why tech companies need policy teams more than ever, and Bert’s work is at the forefront of this.

When I first met Bert, we had already heard of each other, and immediately hit it off. In addition to being extremely kind and generous, Bert is a killer combination of a big-picture, systems thinker – from his days in Washington – and an embodiment of the generous, action-oriented, and creative start-up culture in the Valley, where he currently works.

In this interview, I ask him about his transition from Washington to Silicon Valley, issues surrounding self-driving, what he wishes Government folks knew, and how else he thinks technology should be harnessed for public good.

This is my third profile piece on folks who work at the intersection of tech and public good, following Xinwei Ngiam and Kenneth Tay. Enjoy!

 

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  1. Tell us a little more about yourself. Why did you move to the Valley after almost 8 years in Washington?  

I spent most of my time growing up on the East Coast and down South, so from a cultural standpoint, I always thought Washington was a great mix of north and south—“The Northern most Southern city.” From a professional standpoint, I am a lawyer who loves policy issues, so I gravitated towards Washington after law school. But what I discovered about myself over the past decade is that I really love building organizations and organizing initiatives around good ideas. And there is no better place in the world to build these things than the capital of innovation and entrepreneurship. My move out to the Bay Area was prompted by my fiancée who was in graduate school at Stanford, and because my role as an appointee in the Obama Administration was winding down.

  1. What did you enjoy most about your job in Washington and how did it prepare you for your current role at an autonomous vehicle startup?

Before joining the Obama Administration in 2013, I spent five years growing an organization called Business Forward. We started Business Forward to help business leaders from across the country do a better job of advising Washington policymakers and, conversely, to make it more efficient and transparent for policymakers to listen to business leaders. Through that experience, I faced the challenges of building an organization from scratch and learned the importance of taking a long-term view. Our funding came from about 60 large companies—our members—and I traveled around the country, engaged with thousands of people, and learned about issues that businesses of all shapes, sizes and ages faced as the country emerged out of the 2008-09 financial crisis.

That experience prepared me for the chance to join Penny Pritzker’s team at the Commerce Department. Not only did I get to work for an incredibly brilliant, demanding, and hard-working leader in Secretary Pritzker, but I also had the opportunity to help build and manage an initiative we created called the Presidential Ambassadors for Global Entrepreneurship. This initiative worked across The White House, Commerce and State Departments, USAID, the Small Business Administration, NASA, and with some of America’s most successful entrepreneurs to mentor, motivate, and in some cases fund aspiring entrepreneurs from across the U.S. and around the world. I also worked on policy issues related to the digital economy on areas like data privacy and cybersecurity.

In my role now, as an in-house lawyer working on policy in a sea of engineers and computer scientists, it’s important to communicate clearly and to understand the policy implications of the technology that we’re developing. This is important both within my organization and externally. Transportation is a highly-regulated space, for many important reasons. As a society, we want people to move around freely, but we also want to ensure that they can do so safely. The advent of autonomous vehicles will lead to innovation in road safety. What we are doing is so new that we have the opportunity to create best practices that can set the bar for future policy.

Policy is really important to any technology business intersecting with regulated markets. Technology startups that fail to consider policy or regulatory implications do so at their own peril. Conversely, regulators need to understand that the regulations should be nimble, flexible, and fair and not cumbersome. These principles will allow technology to advance on a level playing field.

  1. What is one thing you’ve learned or experienced that you wish your colleagues in Washington had a chance to?

Meaningful innovation is hard and takes time, so it is important to take a long view. Government can and should catalyze and support innovation through funding basic and applied research and challenge grants. Government should set ambitious policy goals while at the same time leaving innovation to the private sector.

For example, between 2004 and 2007, DARPA (the Defense Advanced Research Projects Agency) set out some “Moonshot-like” challenges and put forth a modest amount of prize money for autonomous vehicle-related technology. Today, the payoffs are huge. The teams that competed in those challenges are the fathers and mothers of all the autonomous driving R&D now taking place across the entire automotive industry. In other words, a series of small government challenges have generated an enormous amount of private sector investment and job creation. Two lessons here: the first is that a little can go a very long way; the second is that government set a goal, got out of the way, and let academia and the private sector drive the evolution of the space.

  1. Self Driving Car technology is one of the hottest areas in the Valley. What are a few things the international community should know about Self Driving Cars?

Three points here:

  • First, autonomous technology will usher in a paradigm shift as large as when we transitioned from the age of the horse and carriage to the age of the automobile. Getting around will allow for increased productivity, and for people who live in areas with poor access to public transit, it could make it easier to access jobs and opportunities. We will also think about real estate differently. For example, much of real estate today is built for and around the automobile. Think parking lots and parking garages. In a world of shared autonomous vehicles, demand for parking decreases.
  • Second, the first rollouts will happen in cities in a ridesharing model, not in vehicles sold to end customers. Cities can benefit from shared electric, autonomous transportation because it will ease congestion and decrease pollution. As more people move into cities, the idea of individual car ownership becomes less tenable. In this model, liability shifts away form individuals towards fleet managers and manufacturers.
  • Finally, and most importantly, safety is paramount. In the U.S., more than 35,000 people are killed every year in automobile collisions. Most of those fatalities are caused by human choice or error. Autonomous vehicle systems will be designed to interact safely on the roads with other road users like human drivers, pedestrians, and cyclists.
  1. Moving away from Self Driving Cars, what is one problem in society today – perhaps one you encountered at the Department of Commerce – that you think we can solve more aggressively using technology?

I think that technology, correctly harnessed and understood, has the potential to improve the lives of many. Technology underpins most of our economy today, and it’s only going to compound over time, so we need to use technology to do a better job of training and educating people for the jobs of the future. Governments can identify important priorities and strategies and incentivize education and training so that people are prepared and trained for an evolving economy.

Finally, as I said earlier, if the private sector’s job is to drive innovation, government should work to ensure that there is an adequate social safety net in place for all people as the economy changes.

Thanks, Bert, for sharing your insights!

 

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Bert, Zoe (his super-woman fiancee) and Talia!
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When a Nudge Becomes a Shove: Uber’s Guilt is All Of Ours

Uber recently made headlines with this feature by the New York Times, on how it uses behavioural insights to get drivers to work longer hours, and go to areas where there is high passenger demand. As Uber drivers are not employees, Uber has very little formal influence over their behavior – they can’t mandate how much drivers drive, or what area they cover. Behavioural nudges are a relatively costless way of getting drivers to do what Uber wants, instead of using monetary incentives. But is Uber particularly guilty?

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A Brief Overview of Behavioural Nudges

The use of behavioural nudges to shape customer, constituent and employee behavior is certainly not unique. Examples abound, including:

  • Businesses and customers. Positive reinforcement is the bedrock of modern advertising. Jeff Bezos from Amazon famously said “through our Selling Coach program, we generate a steady stream of automated machine-learned ‘nudges’ (more than 70 million in a typical week).” Games like candy crush turn us into addicts by providing mini rewards in our brains, releasing the neurochemical dopamine and tapping into the same neuro-circuitry involved in addiction.
  • Governments and constituents. The UK Government has its own Behavioral Insights team, which has helped sign up an extra 100,000 organ donors a year and doubled the number of army applicants by simply changing default options and how emails were written.
  • Employers and employees. One of the reason Google will fix your car, take care of your health and food needs all in one place is because they know it will get you to stay longer and work harder.

Now that you’ve seen some examples, what exactly are “behavioral nudges”? Definitions vary, but I’ll boil it down to two things:

  • Applying an insight about a person’s decision-making calculus (that the person might not even know about himself!) to get him to make the decision you want.
  • The person is likely unaware that this tool is being used (unlike a law or a policy, which he actively shapes his behavior to comply with).

For example, the principle of “loss aversion” suggests that humans are more likely to respond to a potential loss, than a potential gain. When you want drivers to drive for two more hours, tell them they’d lose out on $200 if they didn’t. Don’t tell them they’ll gain $200. We are also a lot more vulnerable to peer pressure than we think. The UK Government managed to nudge forward the payment of £30m a year in income tax by introducing new reminder letters that informed recipients that most of their neighbours had already paid. Never underestimate the power of inertia – which is why companies adopt “opt-out” rather than “opt-in” clauses.

An in-depth article on leading thinkers in the field of behavioural science (Kahneman, Tversky, Thaler, Lewis), can be found here.

The use of behavioural nudges is not new, but data has made it an increasingly powerful tool.

The potential for behavioural nudges is increasing with the proliferation of data about individuals. The more you understand how people make decisions – to work longer hours, to buy your product, to pay their taxes, to brush their teeth, to play a game, the more effectively you can nudge them towards your desired behaviour. Facebook knows more about me than I do. Uber knows more about their drivers than drivers themselves.

As a result, these companies can push buttons I didn’t even know existed. They have the potential to hack my operating system and change my behaviour.

Hence the ethical question of when a “nudge” becomes outright manipulation is more pertinent than ever.

Here are several ways to think about whether a “nudge” is being used ethically. <By the way, some people argue that it’s never OK to curb someone’s “moral freedom” through nudges, but I find that too idealistic – nudges have been used for time immemorial. It has to be a matter of degree.>

First, what is the inherent goodness of the outcome for the target population?

On the positive extreme, behaviours such as showing up at a doctors’ appointment, attending school or paying bills on time can be seen as actions that are positive for the individual. On the negative extreme, you could have outcomes such as an alcoholic purchasing more alcohol, or a suicidal person being nudged off the ledge.

There is huge scope for debate in between the extremes. Uber could argue that getting drivers to work longer hours during peak period is good for their earnings. Facebook would argue that repeatedly pushing advertisements that users are more likely to click helps them find what they need and like faster.

But here are two sub-questions to consider, in Uber’s case:

  • What is the distribution of benefits accruing to Uber vs the driver if the driver changes his behaviour? In this case, there seems to be a direct trade-off between Uber and drivers’ interests. As more drivers come onto the platform as a result of the nudges, drivers don’t benefit from surge pricing. On the other hand, Uber gets the benefit of more rides and hence more earnings.
  • Is there an intention to deceive? The author suggests that some of Uber’s methods nudged drivers towards geographical areas on the pretext of a surge, but when drivers got there, they found there was none. Even if this was not the intention, the asymmetry of information is unfair to drivers. More transparency is needed, perhaps by providing drivers a live feed of surge rates in various areas, including when surge is dropping.

Second, how easy is it to “opt-out”?

The ‘opt-out’ technique is one of the most commonly used “nudges”: always set your preferred option as the default, and count on human inertia (or ignorance) to keep people there. If you are a Netflix user, you’ve experienced this: once your episode ends, the next one comes on automatically in ten seconds. It is a nudge to keep you watching, but you can turn off this feature permanently. Google and Facebook will send you personalized ads, but you can opt-out and get those replaced by randomised advertisements instead.

If you are an Uber driver, you can also temporarily turn off the forward-dispatch feature, which dispatches a new ride to you before the current one ends (keeping you constantly driving, just as Netflix keeps you constantly watching). However, there is no permanent way to turn it off. It will keep popping back on when you take a new ride: you have to be constantly proactive about stopping it if you don’t want to overwork. Does the lack of a permanent opt-out feature make Uber more guilty? Perhaps. But I would like to find out more about the design considerations of both Uber and Lyft before giving a definitive view (hit me up if you have further insight!).

Generally, how proactively institutions educate their users/employees about the opt-out function matters, as does how easy it is to opt-out.

A More Important Question

So is Uber particularly guilty? On the surface it seems to. But want to hear my real answer? I have no idea, simply because much of the nudging that institutions do today is invisible, making it impossible to compare. We – as users, employees, constituents – do not even know that it is happening, and there is no legal obligation to tell us.

Hence, rather than ask whether Uber is guiltier than other institutions which deploy “nudges”, I believe the more important question should be: is self-regulation by these institutions sufficient? If not, does anyone have the moral high-ground to arbitrate? Should there be a system where institutions report their use of “nudges” and hold each other accountable? Would love to hear your thoughts.

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Source: New York Times

Featuring Xinwei Ngiam: Government Policymaker turned Start-up Business Strategist

I’m really excited to share this interview with Xinwei, Director of Strategy at Grab (formerly GrabTaxi), a ridesharing platform in Southeast Asia. She is also Regional Head of Grab’s social ridesharing service, GrabHitch, which beta-launched in Singapore in late 2015 and has since expanded to Kuala Lumpur, Jakarta and Bangkok. Prior to joining Grab, XW worked at the Boston Consulting Group and the Singapore Ministry of Finance.

In this wide-ranging interview, she shares her biggest lessons in her journey from policy-maker to consultant to start-up director, where she wants to see technology applied more aggressively, advice for companies looking to expand into Southeast Asia, and insights for both policy-makers and technologists from both sides of the fence. Besides being a good friend, Xinwei is someone I admire deeply for her work ethic, depth of thought and calm under pressure. Definitely someone to watch 🙂

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1. How did you make the transition from Government to Tech? What’s it like working in a start up vs in a more traditional industry?


After I left Government, I joined consulting for about 2.5 years, and 
thereafter joined Grab, where I’ve been working now for almost 2 years.

I would recommend consulting for any generalist who is looking to learn at hyper-speed about the business world and about the region we live in. While at BCG, I spent at least half of my time in Indonesia (if not more), and it’s benefited me greatly now that I work in and manage teams in our Jakarta office.

Joining Grab opened my eyes to start-up life and culture. I’ve loved this way of working from the beginning – the juxtaposition between the casual team culture but incredibly intense pace of work; the tension between wanting to reach for the stars but having to ruthlessly prioritize based on your current resources and capabilities; the ever-present low-level existential crisis of not quite knowing whether you’re flying or falling. It’s a thrilling place to work, but with that thrill also comes stress and increasingly blurred lines between work and life (my husband will not hesitate to confirm this last point).

For those who are seeking to move from more traditional industries to start-ups, you have to be prepared to let go of some of what you know; but also have confidence that you’re bringing an expertise and knowledge base about how companies work that is very valuable to
start-ups. Some tips:

 

(a) Learn to embrace uncertainty.

Uncertainty will exist in all aspects of start-up life. The type that seems to affect people most is professional uncertainty. In a startup, it’s not uncommon to experience frequent reorganizations, to see the team you joined dismantled, or to undergo several title or portfolio changes in a few months. Then there’s business uncertainty – how do you know whether to invest in a new vertical/market/business or not? When choosing between two ideas that could 10X the business (or send it into a downward spiral) how do you choose? There is no playbook for what startups typically do, and that can cause a lot of anxiety.

There is no perfect remedy for this, but it helps to take a philosophical view that no matter what happens you’ll live to die another day. Channel all your nervous energy into obsessing about your business and outserving your customers, put aside your personal anxieties and just enjoy the ride.

 

(b) Execution is what makes good ideas great

There are two common pitfalls (that I have personally experienced many times now). The first is to overestimate your ability to execute, which results in jam-packed workplans where items are checked off the list, but not done in a truly excellent way. The second is to underestimate the need for excellent execution; this usually comes hot on the heels of a great idea where one is seduced into thinking that the awesomeness of the idea will carry the day.

The truth is that good ideas are everywhere, especially in fast-growing startups where everyone is obsessing over big questions such as how to win market share, how to serve customers better, or how to leapfrog the competition. What makes an idea truly great is elegant, flawless execution that delivers outsized results.

I don’t have any big secrets to share on how to execute well – I’m still very much a student in this journey – but I think a big part of it is about disavowing silver bullets and instead being very deliberate about tracking and measuring any intervention you make in your market. You want to get to a point where you know how best to deploy every dollar based on what channels you have at your disposal and what your objectives are. The tradeoff of course is that learning takes time (not to mention failure), and in a startup, time is often the one thing we don’t have. But our job is to walk that tightrope.

2. What is one problem in society today that you think we can solve more aggressively using technology?

I would really like to see how we can use technology to facilitate elderly lifestyles and caregiving. I think the amount of thinking and consumer research done in the field is simply not commensurate to the tremendous need and opportunity. In fact, elderly care has many similar themes with infant care (ranging from personal hygiene products to food to mobility solutions), but the two sectors are worlds apart in terms of customer-centricity, product variety and innovation. One reason is that elderly people aren’t as tech savvy as younger cohorts, nor are they constantly connected to the internet via smartphones – but that is changing very quickly.  I think there is another deeper reason, which is that elderly care fundamentally faces a brand image problem – we associate it with the end-of-life, the loss of dignity, and diminished versions of ourselves, rather than simply a challenging stage in life where we have different needs and require more support and help than we used to.

I would love to see innovations in areas that facilitate independent living (mobility solutions, health monitoring and remote caregiving of some sort, seamless chronic care), reduce the burden on caregivers, and that use the internet to create active communities or learning opportunities for the elderly.

3. What’s one thing you wish your friends in Government knew about the tech sector, and one thing you wish your friends in the tech sector knew about Government?

That no one is really in this only for the money. There’s a common misconception that everyone in the private sector (and especially in tech companies) is out to make a quick buck. Of course, there are always going to be companies that fit that stereotype. But in my experience, the most impressive and successful entrepreneurs never quite set out to make big bucks. Rather they became obsessed with some crazy idea that they thought could deliver huge impact, executed on it and managed to bring the world along with them.Making money is a necessity for businesses (at least once the growth capital runs out) and so it’s unrealistic to expect companies to behave like charities. But just like the humans who found and build them, companies have their own personalities, culture and DNA. Of course, there’s a limit to how nuanced our regulations and economic policies can be, but if governments see that many businesses come from the same starting point of wanting to make a positive impact on society, then it paves the way for more open and productive engagement.

Another misconception – which, like the first, isn’t restricted to people in Government – is that what makes a tech company great is solely dependent on how good their tech is, and nothing else. The companies that we consider great “tech companies” – Apple, Amazon, Netflix, Facebook, Google – certainly had and continue to build superior technology; but what sets them apart is clarity of focus, a winning business model, and the willingness to fail and pivot.


I recall a conversation with a friend who was trying to understand how Didi beat Uber in China, and a sticking point was whether Didi had any original tech or whether they simply copied ideas; or whether Didi had superior tech which allowed them to win. There are many versions of this story, but what’s fairly clear to me is that technology was merely table-stakes in the Didi-Uber fight; these were two giants at the top of their game and a more finely-tuned surge algorithm was not going to be decisive. What Didi had was incredibly efficient and locally rooted ground operations (back to execution and the ability to deploy every dollar more efficiently than the competition), excellent and often viral marketing, and deep integration with China’s all-pervasive mobile payments network.

In terms of what I wish the private sector understands about Government – I think it’s that the current system of rules and regulations was constructed for a reason and changing it does require time and deep consideration. There’s a general impatience among the private sector with governments, and especially so in the tech sector given that so much of what we do challenges status quo norms and systems. But just as we wish governments understood that we are just trying to serve our customers the best we can, they too need to do the required diligence to make sure that this is the right thing for society as a whole. So the approach shouldn’t be to try and disassociate ourselves from government or brazenly disregard regulations, but to build bridges and try to align our interests. If you’re in it for the long haul, then engagement and trust is the only sustainable way forward.

4.     You work extensively in Indonesia and Kuala Lumpur. What are they key differences in how you operate in these contexts? What advice to you have for companies looking to move into these regions?


One gradually exploding myth about Southeast Asia is that it is a coherent region; in fact, Southeast Asia is extremely fragmented with clusters of countries sharing some common cultural history while others are relatively unrelated. I’ve found that Singapore and KL feel 
culturally very similar, for obvious reasons. Indonesia, on the other hand, feels quite different, more so the further you travel from Jakarta. As my CEO likes to say, Indonesia is a continent, not a country. The energy and vibe is quite different from what you’ll feel in Singapore or KL. The war for talent is far more intense there. We’ve seen some really impressive tech companies come out of Indonesia in the past few years.

If you’re looking to expand to or start something in Indonesia (or really anywhere outside home ground), I think the most important thing to do is to spend time on the ground and learn the language. There’s only so much management you can do from afar, and most of these markets are intensely competitive. There is no substitute for being on the ground and experiencing your product and services in the local context. You’ll learn things that no management report could adequately describe.

 

5. Some of our readers are interested in entering the field of tech. What is your advice for them?


First, if you are currently in a non-technical role but would like to become a technical Product Manager, a software engineer or data scientist, then some formal training is required and there are tons of great options out there to acquire those skills. That aside, I believe that in every company will be a tech company in the future, in some shape or form. It will become increasingly meaningless to think about entering the “tech industry” because every company will have to adopt relevant technology to stay ahead, including how to use the internet to distribute services, understand their customers and facilitate payments and other transactions.

So I would encourage anyone keen on “tech” to first ask themselves what real-world problem they are trying to solve, or what business vertical they feel best fits their interest. Once you’ve figured that out, then go in search of a company that you think is harnessing tech in the right way to solve that problem. Otherwise you put yourself at risk of becoming an unknowing participant in “innovation theatre” in a company that’s just using tech as a marketing tool.

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XW and I at CES2017, speaking about the potential and challenges of the sharing economy in transport

Three ways to build a transportation system that serves the most vulnerable

So far, I’ve talked about how a seamless and enjoyable commute, sans car ownership, can go a long way towards mitigating the experience of inequality in a city.

But transportation systems, even the very best, will never serve everyone equally. Where the transportation system is not inclusive, the cost is borne by some of the most vulnerable in society.

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  • People who do not just need first and last mile transport – they need first and last meter transport. This includes the growing number of elderly (>65 years old), whose population will triple by 2030 in Singapore. It also includes those who have physical disabilities through accidents, illness or congenital conditions. Where the transportation system fails to provide first and last meter support, their caregivers bear the cost. When someone, (especially in a low-income household) leaves the workforce to be a full-time caregiver, there is a huge impact on the financial wellbeing of the family. In a survey by AgingCare.com 62% of caregivers said the cost of caring for a parent had impacted their ability to plan for their own financial future.
  • People who cannot afford rides. In my college years, I volunteered with Homefront, an organization that serves the homeless in New Jersey. I vividly remember talking to a mother whose children only ever ate canned food and hot dogs because they stayed in a Motel on Route 1, and it was too expensive to get to soup kitchens for a proper meal. A once-a-week supermarket trip was all they could afford. In this case, the cost is borne by the children, in the form of health and wellness.
  • People who live or work in inaccessible areas, where it does not make economic sense to deploy a public bus or even a ride-sharing car because there is so little demand. Where the transportation system does not provide, the cost is borne by the individuals or companies who have to cater private transport.

 

None of these groups are mutually exclusive. In fact, I hazard a guess that the number of families who fulfill at least two of these three conditions is not small, and will grow with the forces of aging and inequality.

For cities to provide a truly inclusive transportation experience, we need to explore three ideas:

  1. Closing the first-and-last meter transport gap through community participation

Currently, caregivers are responsible for the first-and-last meter transport gap. If 85-year old Jim needs to go to the clinic, his caregiver helps him onto the wheelchair at home, takes the elevator to the ground floor, and helps him board either the bus or the taxi. When he arrives at the clinic, his caregiver helps him out of the bus, and into the clinic for registration.

Can volunteers fill the first-and-last meter transport gap instead? For example, when Jim orders his ride to the clinic, can a request be blasted to volunteers who are in the 200-yard radius of his home or destination? It can be a simple five to ten minute volunteering stint – helping Jim out of his home and onto the bus, or out of the bus and into the clinic for registration.

With one click of a button, Jim should be able to pick and pay for his transport menu to the clinic, and get first-and-last meter support from the community. Volunteers who choose to be in the network can do good in bite-sized chunks. They don’t need to go out of their way – they receive alerts as they go about their daily lives. Perhaps we can lighten the load of caregivers.

This idea has taken off with apps like GoodGym, where runners can sign up to visit an elderly person or help with one-off tasks while on their running route. It would be important to integrate these efforts with our transportation networks so that people like Jim can enjoy seamless transportation experiences and live independently in the community, as many elderly desire.

 

  1. Closing the affordability and accessibility gap through public-private partnerships

Take Zara, the mother of four living in a Motel on Route 1 in New Jersey. Stranded because there are no public transportation options along Route 1, while ride sharing and taxis are too expensive.

It may not make sense for the Government to provide a public bus that passes by her Motel, simply because there is too little demand. I’ve personally experienced this. I used to live in a relatively inaccessible area in Singapore. Our municipality constantly lobbied the Government to provide a new bus line to serve us. We finally got it after 2 years, but every time I boarded that bus I counted no more than 5 people on it. Great for me, but it just wasn’t a great use of public funds to deploy a $100,000 bus way below capacity. Not to mention the additional congestion we created.

Here’s one idea for Governments: instead of buying a new bus to provide a bus line in inaccessible areas, use the money to subsidize rides by private providers such that it matches the cost of public transport. Furthermore, if a family like Zara’s is eligible for subsidies on public transportation, these should be applicable when they take rides by private providers.

This will require close collaboration between the Government and private providers (yes, operational issues will not be easy!), but is the most cost-effective way of closing the accessibility and affordability gap.

Some cities in the U.S. are working on this concept. For example, The Southeastern Philadelphia Transportation Authority (SEPTA) had insufficient parking lots at their train stations to accommodate commuters who drove to the station and dropped off their cars for the day. It did not make sense to make a huge investment in building new parking lots. Last year, they partnered with uber to provide a 40% discount on Uber rides to and from rail stations, encouraging people to share rides instead of drive.

  1. Deploying autonomous vehicles

Autonomous vehicles hold tremendous promise for our objectives of inclusive transport because they will likely reduce the cost of rides. First, a bulk of a ride’s cost today is the salary of the driver. Second, companies are moving towards deploying autonomous vehicles in fleets. When vehicles are constantly utilized, companies can afford to charge less per ride. Finally, with technological advances, we can expect the hardware of autonomous vehicles, such as Lidars, to decrease in cost.

When this occurs, it will make more economic sense for companies to deploy vehicles to inaccessible areas, even if there is no promise of a return trip. Reduced prices also means that transport will be more affordable to families like Zara.

A city that plans ahead will ensure that autonomous vehicles are deployed in a way that benefits the broader population. For example, road space should not be dominated by privately-owned autonomous vehicles; Autonomous vehicle fleets should be embraced. Helping city-dwellers accept autonomous vehicles as part of their daily transportation experience is also an important part of the equation.

 

Conclusion

In my first post, I talked about how a seamless and enjoyable commute, sans car ownership, can go a long way towards mitigating the experience of inequality in a city. In my second post, I explored the ways Governments must work with private transport providers to ensure a truly seamless commute in the sharing economy – one that mimics the comfort of car ownership.

This third post covered three ways to ensure that our transportation system caters to some of the most vulnerable members of our society: community participation, public-private partnerships, and embracing autonomous vehicles. Inclusivity is an objective that is particularly close to my heart.

My final post in this series will be about the darker side of the shared economy, and how cities and business must work together to manage disruptions to our transportation system, including the rise of ride-sharing technology companies, as well as the advent of autonomy.

The sharing economy tackles one of the biggest issues every modern city faces – inequality.

Last week I spoke on a CES panel “Powering the Shared Economy to Improve the Lives of City Dwellers”. My co-panellists were Zipcar, Lyft and Grab, so our discussion naturally focused on the sharing economy in transport. Our full session was recorded here.

As the only Government representative on the panel, the inevitable question to me was – how does the sharing economy impact a city? How does it fit into our plans? How does it change the way we operate? I’ll touch on the first question for now.

I believe the impact of the sharing economy goes beyond improving transport.

It has the potential to address one of the biggest issues every modern city faces – inequality.

Companies working on ride-sharing, car-sharing and autonomous vehicle fleets have the potential to make a much more fundamental impact on society than some might think.  

1. One of a city dweller’s most acute experiences of inequality is the daily commute.

Very few of us have the rising Gini coefficient at the top of our minds, but we feel its impact when we go about our daily lives. For example, in Singapore, the daily commute is a constant reminder of luxuries we may never afford. Just five years ago, there were three ways to get around the city:

  • I buy a car. It costs $100-$150k to buy a car[1], but I get the ultimate customisation in my commute. I can leave my house whenever I want, I don’t have to wait, I sit in air-conditioned comfort. I get to my destination in half the time of the equivalent journey on public transport.
  • I take public transport, which is cheap but the experience is quite the opposite of customisation. If I’m lucky, I get to the bus stop just as my bus is pulling in. If not, I wait 10 minutes, which has a knock-on effect on catching my next bus or train. I squeeze with strangers and hardly have room to move. I walk from my bus stop to work and am drenched in sweat from the 98% humidity.
  • I take a taxi, but only if I’m desperate and/or feeling rich, and it’s not always easy to catch one. At some point, taxis were waiting outside the Central Business District during peak hours so they could make an extra buck from being called, rather than hailed.

Five years ago, the trade-off between cost and comfort in the transport experience was extremely stark. A city dweller experiences inequality when he knows he will never be able to afford the comfort of a $100-$150k car, and feels like he doesn’t have a good alternative.

2.  By providing good travel experiences without the cost of car ownership, the sharing economy reduces the experience of inequality in the daily commute. 

The sharing economy has always played a central role in moving people around the city – in the form of public transport. Too bad public transport in most places gives the sharing economy a bad name.

Fortunately, technology and business innovations have given the sharing economy a much needed boost. For example, technology has enabled people to find a ride in real-time, with the click of an iPhone button. Business innovations such as Uberpool have brought down the cost of rides – in many places, below the traditional taxi fare.[1]

As a commuter, I now have a wide range of options sandwiched between owning a car and taking public transport. On the spectrum closest to car ownership, I can get an Uber or short-term rental car (e.g. Zipcar) on demand. For a slight decrease in cost, I can share my ride with others in a LyftLine/Uberpool. If I want to trade off some flexibility for an even cheaper fare, I can submit a bid on crowd-sourced bus services like Beeline or SWAT. Even public transport has improved significantly with LTA providing real-time information on bus arrival times and crowdedness.

Importantly, this expansion of good options means that commuters don’t need to make such a stark choice between cost and comfort when deciding whether or not to buy a car. This reduces the experience of inequality in the daily commute.

3. The best has yet to come – with the promise of autonomous vehicles, participating in the sharing economy will not just be a concession, but a superior option to car ownership.

Some people are already beginning to see shared transport as a superior option to owning a personal car because of the flexibility it brings. I can choose the option which fits my lifestyle – sometimes public transport works just fine, but if I’m in a hurry or on a date, I may pay more for a more comfortable experience. Importantly, I never have to worry about where to park.

In contrast, car owners can feel compelled to use their cars even if there are better options. Behavioural economists refer to car owners in Singapore as having a “sunk cost mentality”. Put simply, once you pay a bomb to own the car, nothing – not road taxes, expensive parking, the prospect of circling the block for an hour to find an empty lot, or for some, being caught drunk-driving – will stop you from using your car, because in your mind you’ve already sunk such a huge investment and you should use it as much as you can. It can be a psychological trap.

I believe that when autonomous vehicles are ready to be deployed in fleets (imagine Uber without drivers), shared transport will become even more attractive compared to car ownership. Commuting in the shared economy can become an experience, not just a necessary evil. When cars do not need to be driven by humans, new design possibilities open up. A steering wheel and front-facing seats are no longer necessary, and a car can be configured like a meeting room, for example. A car ride can be a place to meditate, focus on work or even have wine with your friends on the way to a party.

When many different designs of vehicles are deployed in a fleet, you will be able to summon precisely the vehicle (and accompanying service) you want. In the morning you could use a minivan to ferry your family to school and work, in the evening you could summon a sleek, designer vehicle to bring you to your company’s dinner function. On the weekend, a jeep could take your family around the island for some R&R.

Today, owning a private car is the standard for luxury transportation. People make a large financial outlay upfront in exchange for on-demand, customised transportation. With fleets of autonomous vehicles deployed round-the-clock, providing the ultimate customisation in travel experience, more efficiently and without the pains of parking, this paradigm will be overturned. Shared transport will be the more affordable and customised and comfortable experience. Fewer and fewer people will aspire to own a car.

4. A transportation system dominated by the sharing economy frees up precious city space for community, housing, and commercial activities

So far, I’ve talked about how technological developments may make many of us prefer shared transport over car ownership, and how that could help mitigate our experience of inequality in the city.

If more people choose shared transport instead of car ownership, this will also enable us to use our land more equitably and progressively: think about how roads and parking spaces are disproportionately used by those who have the resources to own cars. If we can reduce the number of cars on the road, this land can be used for purposes that benefit a more diverse population such as homes, community facilities and commerce.

In cities like Singapore, where land is a constrained resource, it is even more important to make sure we use it to benefit everyone, not just those who can afford it.

5. The vision of a more equal transportation experience and society can only be realised if Governments and businesses work together. Stay tuned for more.

I’m deliberately painting an ideal picture here.

Many things can detract from this vision of a less unequal transportation experience. For example, if the business models for autonomous vehicles target only the rich, or if we fail to make multi-modal transportation seamless for commuters in the shared economy (commuters really dislike the process of transferring from a bus to a train, and vice versa).

Furthermore, I’ve mainly spoke about issues pertaining to the “middle class” Some groups have not been addressed, such as the elderly and disabled. How can we ensure that the system benefits those with limited mobility?

In my next series of posts, I will explore these issues in greater detail, and talk about how partnerships between Governments and businesses can ensure that the forces of talent and technology powering the shared economy will be used towards maximum societal and business benefit. Stay tuned!

[1] Though the extent to which fare decreases are structural versus artificially depressed by Venture Capital investment is yet to be seen, a topic I discuss at https://techandpublicgood.com/2017/02/07/the-dark-side-of-the-shared-economy-in-transport-and-three-solutions/

[1] For an explanation on why cars in Singapore are so expensive, see this link. At a macro level, it’s about restricting the supply of cars to manage traffic and road space. http://dollarsandsense.sg/no-nonsense-explanation-on-why-cars-in-singapore-are-so-expensive/

[2] If the “sharing economy” is defined as a having access to an asset that you do not own. I find this to be the most compelling definition.